Exhibit 10.1
$225,000,000 AGGREGATE PRINCIPAL
AMOUNT
HEALTH MANAGEMENT ASSOCIATES,
INC.
3.75% CONVERTIBLE SENIOR
SUBORDINATED NOTES
DUE 2028
Purchase Agreement
dated May 15,
2008
Purchase Agreement
May 15, 2008
BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
Health Management Associates, Inc.,
a Delaware corporation (the “Company”), proposes to
issue and sell to the several purchasers named in
Schedule A (the “Initial Purchasers”),
$225,000,000 in aggregate principal amount of its 3.75% Convertible
Senior Subordinated Notes due 2028 (the “Firm Notes”).
In addition, the Company has granted to the Initial Purchasers an
option to purchase up to an additional $25,000,000 in aggregate
principal amount of its 3.75% Convertible Senior Subordinated Notes
due May May 1, 2028 (the “Optional Notes” and,
together with the Firm Notes, the “Notes”), as provided
in Section 2. Banc of America Securities LLC
(“BAS”) has agreed to act as representatives of the
several Initial Purchasers (in such capacity, the
“Representatives”) in connection with the offering and
sale of the Notes. To the extent that there are no additional
Initial Purchasers listed on Schedule A other than you, the
terms Representatives and Initial Purchasers as used herein shall
mean you, as Initial Purchasers. The terms Representatives and
Initial Purchasers shall mean either the singular or plural as the
context requires.
The Notes will be convertible on the
terms, and subject to the conditions, set forth in the indenture
(the “Indenture”) to be entered into between the
Company and the U.S. Bank, N.A., as trustee (the
“Trustee”), on the Closing Date (as defined herein). As
used herein, “Conversion Shares” means the fully paid,
nonassessable shares of common stock, par value $0.01 per share, of
the Company (the “Common Stock”), if any, to be
received by the holders of the Notes upon conversion of the Notes
pursuant to the terms of the Notes and the Indenture. The Notes
will be convertible initially at a conversion rate of 85.0340
shares per $1,000 principal amount of the Notes, on the terms, and
subject to the conditions, set forth in the Indenture.
The Notes will be offered and sold
to the Initial Purchasers without being registered under the
Securities Act of 1933, as amended, and the rules and regulations
of the Securities and Exchange Commission (the
“Commission”) thereunder (the “Securities
Act”), in reliance upon an exemption therefrom. This
Agreement, the Indenture and the Notes are referred to herein
collectively as the “Operative Documents”.
The Company understands that the
Initial Purchasers propose to make an offering of the Notes on the
terms and in the manner set forth herein and in the Disclosure
Package (as defined below), including the Preliminary Offering
Memorandum (as defined below), and the Final Offering Memorandum
(as defined below) and agrees that the Initial Purchasers may
resell, subject to the conditions set forth herein, all or a
portion of the Notes to purchasers (the “Subsequent
Purchasers”) at any time after the date of this
Agreement.
The Company has prepared an offering
memorandum, dated the date hereof, setting forth information
concerning the Company, the Notes and the Common Stock, in form and
substance reasonably satisfactory to the Initial Purchasers. As
used in this Agreement, “Offering Memorandum” means,
collectively,
the Preliminary Offering Memorandum dated as of
May 15, 2008 (the “Preliminary Offering
Memorandum”) and the offering memorandum dated the date
hereof (the “Final Offering Memorandum”), each as then
amended or supplemented by the Company. As used herein, each of the
terms “Disclosure Package”, “Offering
Memorandum”, “Preliminary Offering Memorandum”
and “Final Offering Memorandum” shall include in each
case the documents incorporated or deemed to be incorporated by
reference therein.
The Company hereby confirms its
agreements with the Initial Purchasers as follows:
Section 1. Representations,
Warranties and Covenants of the Company.
The Company hereby represents and
warrants to, and covenants with, each Initial Purchaser as
follows:
(a) No Registration .
Assuming the accuracy of the representations and warranties of the
Initial Purchasers contained in Section 6 and their compliance
with the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Notes to the Initial
Purchasers, the offer, resale and delivery of the Notes by the
Initial Purchasers and the conversion of the Notes into Conversion
Shares, in each case in the manner contemplated by this Agreement,
the Indenture, the Disclosure Package and the Offering Memorandum,
to register the Notes or the Conversion Shares under the Securities
Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended (the “Trust Indenture
Act”).
(b) No Integration . None of
the Company or any of its subsidiaries has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any “security” (as defined in
the Securities Act) that is or will be integrated with the sale of
the Notes or the Conversion Shares in a manner that would require
registration under the Securities Act of the Notes or the
Conversion Shares.
(c) Rule 144A . No securities
of the same class (within the meaning of Rule 144A(d)(3) under the
Securities Act) as the Notes are listed on any national securities
exchange registered under Section 6 of the Exchange Act, or
quoted on an automated inter-dealer quotation system.
(d) Exclusive Agreement . The
Company has not paid or agreed to pay to any person any
compensation for soliciting another person to purchase any
securities of the Company (except as contemplated in this
Agreement).
(e) Offering Memoranda . The
Company hereby confirms that it has authorized the use of the
Disclosure Package, including the Preliminary Offering Memorandum,
and the Final Offering Memorandum in connection with the offer and
sale of the Notes by the Initial Purchasers. Each document, if any,
filed or to be filed pursuant to the Exchange Act and incorporated
by reference in the Disclosure Package or the Final Offering
Memorandum complied when it was filed, or will comply when it is
filed, as the case may be, in all material respects with the
Exchange Act and the rules and regulations of the Commission
thereunder. The Preliminary Offering Memorandum, at the date
thereof, did not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. At the date of this Agreement, the
Closing Date and on any Subsequent Closing Date, the Final Offering
Memorandum did not and will not (and any amendment or supplement
thereto, at the date thereof, at the Closing Date and on any
Subsequent Closing Date, will not) contain any untrue statement of
a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that the Company makes no representation or warranty
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as to information contained in or omitted from
the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser
through BAS expressly for use therein, it being understood and
agreed that the only such information furnished by any Initial
Purchaser consists of the information described as such in
Section 8 hereof.
(f) Disclosure Package . The
term “Disclosure Package” shall mean (i) the
Preliminary Offering Memorandum, as amended or supplemented at the
Applicable Time, (ii) the Final Term Sheet (as defined herein)
and (iii) any other writings that the parties expressly agree
in writing to treat as part of the Disclosure Package
(“Issuer Written Information”). As of 5:00 pm, New York
time, on the date of execution and delivery of this Agreement (the
“Applicable Time”), the Disclosure Package did not
contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package based upon
and in conformity with written information furnished to the Company
by any Initial Purchaser through BAS expressly for use therein, it
being understood and agreed that the only such information
furnished by any Initial Purchaser consists of the information
described as such in Section 8 hereof.
(g) Statements in Offering
Memorandum . The statements in the Disclosure Package and the
Final Offering Memorandum under the heading “Certain United
States Income Tax Considerations”, insofar as such statements
summarize legal matters, agreements, documents or proceedings
discussed therein, are accurate and fair summaries of such legal
matters, agreements, documents or proceedings.
(h) Offering Materials Furnished
to Initial Purchasers . The Company has delivered to the
Representatives copies of the materials contained in the Disclosure
Package and the Final Offering Memorandum, each as amended or
supplemented, in such quantities and at such places as the
Representatives have reasonably requested for each of the Initial
Purchasers.
(i) Authorization of the Purchase
Agreement . This Agreement has been duly authorized, executed
and delivered by the Company.
(j) Authorization of the
Indenture . The Indenture has been duly authorized by the
Company and, on the Closing Date, the Indenture will have been duly
executed and delivered by the Company and, assuming due
authorization, execution and delivery thereof by the Trustee, will
constitute a legally valid and binding agreement of the Company
enforceable against the Company in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles; and the Indenture conforms in all
material respects to the description thereof contained in the
Disclosure Package and the Final Offering Memorandum.
(k) Authorization of the
Notes . The Notes have been duly authorized by the Company;
when the Notes are executed, authenticated and issued in accordance
with the terms of the Indenture and delivered to and paid for by
the Initial Purchasers pursuant to this Agreement on the respective
Closing Date (assuming due authentication of the Notes by the
Trustee), such Notes will constitute legally valid and binding
obligations of the Company, entitled to the benefits of the
Indenture and enforceable against the Company in accordance with
their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights and remedies of creditors
or by general equitable principles; and the Notes will conform in
all material respects to the description thereof contained in the
Disclosure Package and the Final Offering Memorandum.
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(l) Authorization of the
Conversion Shares . The Conversion Shares have been duly
authorized and reserved and, when issued upon conversion of the
Notes in accordance with the terms of the Notes and the Indenture,
will be validly issued, fully paid and nonassessable, and the
issuance of such shares will not be subject to any preemptive or
similar rights.
(m) No Material Adverse
Change . Except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), subsequent to the respective dates as of which
information is given in the Disclosure Package: (a) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings, business, operations or affairs or
business prospects of the Company and its subsidiaries considered
as one entity, whether or not arising in the ordinary course of
business (any such change is called a “Material Adverse
Change”), (b) there has not been any material adverse
change or any development involving a prospective material adverse
change in the capital stock or in the long-term debt of the Company
or any of its subsidiaries considered as one enterprise and
(c) neither the Company nor any of its subsidiaries considered
as one enterprise has incurred any material liability or
obligation, direct or contingent.
(n) Independent Accountants .
Ernst & Young LLP, who have expressed their opinion with
respect to the financial statements (which term as used in this
Agreement includes the related notes thereto) included as a part of
or incorporated by reference in the Disclosure Package and the
Final Offering Memorandum, are independent registered public
accountants with respect to the Company as required by the
Securities Act and the Exchange Act and the applicable published
rules and regulations thereunder.
(o) Preparation of the Financial
Statements . The financial statements included or incorporated
by reference in the Disclosure Package and the Final Offering
Memorandum present fairly the consolidated financial position,
results of operations and statements of cash flows of the Company
and its subsidiaries on the basis stated or incorporated by
reference at the respective dates or for the respective periods to
which they apply; to the extent required, such statements have been
prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) consistently
applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and
data set forth or incorporated by reference in the Disclosure
Package and the Final Offering Memorandum (and any amendment or
supplement thereto) are, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company, as the case
may be.
(p) Incorporation and Good
Standing of the Company and its Subsidiaries . Each of the
Company and its subsidiaries has been duly incorporated or formed,
as the case may be, and is validly existing as a corporation or
other entity, as the case may be, in good standing under the laws
of its jurisdiction of its incorporation or formation, as the case
may be, and has the power and authority to own or lease, as the
case may be, and operate its properties and to conduct its business
as described in the Disclosure Package and the Final Offering
Memorandum and, in the case of the Company, to enter into and
perform its obligations under this Agreement. The Company and each
of its subsidiaries is duly qualified as a foreign corporation or
other entity to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions where the failure to so
qualify or to be in good standing would not, individually or in the
aggregate, result in a material adverse effect on the condition,
financial or otherwise, or on the earnings, business, properties,
operations or prospects, whether or not arising from transactions
in the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (a “Material Adverse
Effect”).
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(q) Subsidiaries. All of the
outstanding shares of capital stock or other equity interests of
each subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and, except as disclosed in the
Disclosure Package and Final Offering Memorandum, are owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim,
except for any security interest, pledge, lien, encumbrance or
claim arising under that certain Credit Agreement dated as of
February 16, 2007 among the Company, Bank of America, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer, Wachovia
Bank, National Association, as Syndication Agent, and certain other
parties thereto and the documents entered into in connection
therewith (the “Credit Agreement”). Except as set forth
on Schedule C , the Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed in Exhibit 21 to the
Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2007.
(r) Capitalization and Other
Capital Stock Matters . The authorized, issued and outstanding
capital stock of the Company is as set forth in the Disclosure
Package and the Final Offering Memorandum under the caption
“Capitalization” (other than for subsequent issuances,
if any, pursuant to employee benefit plans described in the
Disclosure Package and the Final Offering Memorandum or upon
exercise of outstanding options or warrants described in the
Disclosure Package and the Final Offering Memorandum, as the case
may be). The Common Stock (including the Conversion Shares)
conforms in all material respects to the description thereof
contained in the Disclosure Package and the Final Offering
Memorandum. All of the outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid, nonassessable
and are not subject to preemptive rights, rights of first refusal
or other similar rights other than those accurately described in
the Disclosure Package or the Final Offering Memorandum. The
outstanding shares of Common Stock have been issued in compliance
with federal and state securities laws. The description of the
Company’s stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted thereunder,
set forth or incorporated by reference in the Disclosure Package
and the Final Offering Memorandum accurately and fairly presents
and summarizes such plans, arrangements, options and rights in all
material respects.
(s) Non-Contravention of Existing
Instruments; No Further Authorizations or Approvals Required .
Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or by-laws, (ii) in
default (or, with the giving of notice or lapse of time, would be
in default) (“Default”) in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or
their respective property is bound or (iii) in violation of
any statute, law, rule, regulation, judgment, order or decree of
any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the
Company or such subsidiary or any of its properties, as applicable,
except, with respect to clause (i) above only, as would not
reasonably be expected to have a Material Adverse
Effect.
The execution, delivery and
performance of this Agreement, the Indenture and the Notes and the
consummation of the transactions contemplated herein and in the
Disclosure Package and the Final Offering Memorandum (including the
issuance and sale of the Notes and the use of the proceeds from the
sale of the Notes as described in the Disclosure Package and the
Final Offering Memorandum under the caption “Use of
Proceeds”) and compliance by the Company with its obligations
hereunder and under the Indenture and the Notes by the Company,
compliance by the Company with all provisions hereof and thereof
and the consummation of the transactions contemplated hereby and
thereby will not (a) require any consent, approval,
authorization or other order of, or qualification with, any court
or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various
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states), (b) conflict with or constitute a
breach of any of the terms or provisions of, or a Default under,
the charter or by-laws of the Company or any of its subsidiaries or
any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or
their respective property is bound, (c) violate or conflict
with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having
jurisdiction over the Company, any of its subsidiaries or their
respective property, (d) result in the imposition or creation
of (or the obligation to create or impose) a lien under any
material agreement or material instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any
of its subsidiaries or their respective property is bound (an
“Existing Instrument”), or (e) result in the
termination, suspension or revocation of any Authorization (as
defined below) of the Company or any of its subsidiaries or result
in any other impairment of the rights of the holder of any such
Authorization.
(t) No Material Actions or
Proceedings . Except as otherwise disclosed in the Disclosure
Package and the Final Offering Memorandum, there are no legal or
governmental actions, suits or proceedings pending or, to the best
of the Company’s knowledge, threatened against or affecting
the Company or any of its subsidiaries, (i) which have as the
subject thereof any officer or director of, or property owned or
leased by, the Company or any of its subsidiaries or
(ii) relating to environmental or discrimination matters,
where in either such case, (A) there is a reasonable
possibility that such action, suit or proceeding might be
determined adversely to the Company or such subsidiary, or any
officer or director of, or property owned or leased by, the Company
or any of its subsidiaries and (B) any such action, suit or
proceeding, if so determined adversely, would reasonably be
expected to have a Material Adverse Effect or adversely affect the
consummation of the transactions contemplated by this
Agreement.
(u) Labor Matters . No labor
problem or dispute with the employees of the Company or any of its
subsidiaries exists or is threatened or imminent, and the Company
is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its or its
subsidiaries’ principal suppliers, contractors or customers,
that would not reasonably be expected to have a Material Adverse
Effect.
(v) Intellectual Property
Rights . The Company and its subsidiaries own, possess, license
or have other rights to use, on reasonable terms, all patents,
patent applications, trade and service marks, trade and service
mark registrations, trade names, copyrights, licenses, inventions,
trade secrets, technology, know-how and other intellectual property
(collectively, the “Intellectual Property”) necessary
for the conduct of the Company’s business as now conducted or
as proposed in the Disclosure Package and the Final Offering
Memorandum to be conducted. Except as set forth in the Disclosure
Package and the Final Offering Memorandum, (a) no party has
been granted an exclusive license to use any portion of such
Intellectual Property owned by the Company; (b) to the
Company’s knowledge, there is no material infringement by
third parties of any such Intellectual Property owned by or
exclusively licensed to the Company; (c) there is no pending
or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s
rights in or to any material Intellectual Property, and the Company
is unaware of any facts that would form a reasonable basis for any
such claim; (d) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such material Intellectual
Property, and the Company is unaware of any facts that would form a
reasonable basis for any such claim; and (e) there is no
pending or threatened action, suit, proceeding or claim by others
that the Company’s business as now conducted infringes or
otherwise violates any material Intellectual Property rights of
third parties.
(w) All Necessary Permits,
etc . Each of the Company and its subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations
and other approvals (each, an “Authorization”) of, and
has made all filings with and notices to, all governmental or
regulatory authorities and self-regulatory
6
organizations and all courts and other
tribunals, including, without limitation, under any applicable
Environmental Laws (as defined below), as are necessary to own,
lease, license and operate its respective properties and to conduct
its business, except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. Each
such Authorization is valid and in full force and effect and each
of the Company and its subsidiaries is in compliance with all the
terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or
governing body) which allows, or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or
both, would result in any other impairment of the rights of the
holder of any such Authorization; and such Authorizations contain
no restrictions that are burdensome to the Company or any of its
subsidiaries; except where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or
in the aggregate, have a Material Adverse Effect.
(x) Title to Properties . The
Company and each of its subsidiaries has good and marketable title
to all the properties and assets reflected as owned in the
financial statements referred to in Section 1(o) above, in
each case free and clear of any security interests, mortgages,
liens, encumbrances, equities, claims and other defects, except for
(i) liens securing the obligations under the Credit Agreement
or (ii) those as do not materially and adversely affect the
value of such property and do not materially interfere with the use
made or proposed to be made of such property by the Company or such
subsidiary. The real property, improvements, equipment and personal
property held under lease by the Company or any subsidiary are held
under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or
proposed to be made of such real property, improvements, equipment
or personal property by the Company or such subsidiary.
(y) Tax Law Compliance . The
Company and its subsidiaries have filed all necessary federal,
state, local and foreign income and franchise tax returns in a
timely manner and have paid all taxes required to be paid by any of
them and, if due and payable, any related or similar assessment,
fine or penalty levied against any of them, except for any taxes,
assessments, fines or penalties as may be being contested in good
faith and by appropriate proceedings. The Company has made
appropriate provisions in the financial statements referred to in
Section 1(o) above in respect of all federal, state, local and
foreign income and franchise taxes for all current or prior periods
as to which the tax liability of the Company or any of its
subsidiaries has not been finally determined.
(z) Company Not an
“Investment Company” . The Company has been advised
of the rules and requirements under the Investment Company Act
of 1940, as amended, and the rules and regulations promulgated
thereunder (the “Investment Company Act”). The Company
is not, and after receipt of payment for the Notes and the
application of the proceeds thereof as contemplated under the
caption “Use of Proceeds” in the Disclosure Package and
the Final Offering Memorandum will not be, an “investment
company” within the meaning of the Investment Company Act and
will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
(aa) Compliance with Reporting
Requirements . The Company is subject to and in full compliance
with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act.
(bb) Insurance . The Company
and its subsidiaries are adequately self insured or are insured by
recognized, financially sound and reputable institutions with
policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real
and personal property owned or leased by the Company
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and its subsidiaries against theft, damage,
destruction, acts of terrorism or vandalism and (if applicable)
earthquakes. All policies of insurance insuring the Company or any
of its subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the
Company and its subsidiaries are in compliance with the terms of
such policies and instruments in all material respects; and there
are no material claims by the Company or any of its subsidiaries
under any such policy or instrument as to which any insurance
company is denying liability or defending under a reservation of
rights clause; and neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for. The
Company has no reason to believe that it or any subsidiary will not
be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable
coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost
that would not have a Material Adverse Effect.
(cc) No Restriction on Dividends
or Other Distributions. No subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any
dividends or other distributions to the Company, from making any
other distribution on such subsidiary’s capital stock, from
repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except (i) as set forth in the
Credit Agreement, (ii) under the governing documents of any
joint venture arrangement to which the Company or any subsidiary is
a party, (iii) statutory or regulatory restrictions applicable
to Insurance Company of the Southeast, Ltd., an exempted company
organized under the laws of the Cayman Islands, or Southwest
Physicians Risk Retention Group, Inc., a captive insurance company
organized under the laws of the State of South Carolina, or
(iv) as described in or contemplated by the Disclosure Package
or the Final Offering Memorandum.
(dd) No Price Stabilization or
Manipulation . The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Notes.
(ee) Related Party
Transactions . There are no material business relationships or
related-party transactions involving the Company or any subsidiary
or any other person that have not been described in the Disclosure
Package or the Final Offering Memorandum.
(ff) No General Solicitation
. None of the Company or any of its affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act (“Regulation
D”)) has, directly or through an agent, engaged in any form
of general solicitation or general advertising in connection with
the offering of the Notes or the Conversion Shares (as those terms
are used in Regulation D) under the Securities Act or in any manner
involving a public offering within the meaning of Section 4(2)
of the Securities Act; and the Company has not entered into any
contractual arrangement with respect to the distribution of the
Notes or the Conversion Shares except for this
Agreement.
(gg) Compliance with
Environmental Laws . Except as otherwise disclosed in the
Disclosure Package and the Final Offering Memorandum,
(i) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law, regulation,
order, permit or other requirement relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata) or wildlife, including without limitation,
laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum and petroleum
products (collectively, “Materials of Environmental
Concern”), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental
8
Concern (collectively, “Environmental
Laws”), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its
subsidiaries under applicable Environmental Laws, or noncompliance
with the terms and conditions thereof, nor has the Company or any
of its subsidiaries received any written communication, whether
from a governmental authority, citizens group, employee or
otherwise, that alleges that the Company or any of its subsidiaries
is in violation of any Environmental Law, except as would not,
individually or in the aggregate, have a Material Adverse Effect;
(ii) there is no claim, action or cause of action filed with a
court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased
or operated by the Company or any of its subsidiaries, now or in
the past (collectively, “Environmental Claims”),
pending or, to the Company’s knowledge, threatened against
the Company or any of its subsidiaries or any person or entity
whose liability for any Environmental Claim the Company or any of
its subsidiaries has retained or assumed either contractually or by
operation of law, except as would not, individually or in the
aggregate, have a Material Adverse Effect; (iii) to the best
of the Company’s knowledge, there are no past, present or
anticipated future actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation
of any Environmental Law, require expenditures to be incurred
pursuant to Environmental Law, or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries
or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law,
except as would not, individually or in the aggregate, have a
Material Adverse Effect; and (iv) neither the Company nor any
of its subsidiaries is subject to any pending or, to the
Company’s knowledge, threatened proceeding under
Environmental Law to which a governmental authority is a party and
which is reasonably likely to result in monetary sanctions of
$100,000 or more.
(hh) ERISA Compliance . None
of the following events has occurred or exists: (i) a failure
to fulfill the obligations, if any, under the minimum funding
standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”), and the regulations and published
interpretations thereunder with respect to a Plan, determined
without regard to any waiver of such obligations or extension of
any amortization period; (ii) an audit or investigation by the
Internal Revenue Service, the U.S. Department of Labor, the Pension
Benefit Guaranty Corporation or any other federal or state
governmental agency or any foreign regulatory agency with respect
to the employment or compensation of employees by the Company or
any of its subsidiaries that would reasonably be expected to have a
Material Adverse Effect; (iii) any breach of any contractual
obligation, or any violation of law or applicable qualification
standards, with respect to the employment or compensation of
employees by the Company or any of its subsidiaries that would
reasonably be expected to have a Material Adverse Effect. None of
the following events has occurred or is reasonably likely to occur:
(i) a material increase in the aggregate amount of
contributions required to be made to all Plans in the current
fiscal year of the Company and its subsidiaries compared to the
amount of such contributions made in the Company and its
subsidiaries’ most recently completed fiscal year;
(ii) a material increase in the Company and its
subsidiaries’ “accumulated post-retirement benefit
obligations” (within the meaning of Statement of Financial
Accounting Standards 106) compared to the amount of such
obligations in the Company and its subsidiaries’ most
recently completed fiscal year; (iii) any event or condition
giving rise to a liability under Title IV of ERISA that would
reasonably be expected to have a Material Adverse Effect; or
(iv) except as disclosed in the Disclosure Package and the
Final Offering Memorandum, a claim by one or more employees or
former employees of the Company or any of its subsidiaries related
to its or their employment that would
9
reasonably be expected to have a Material
Adverse Effect. For purposes of this paragraph, the term
“Plan” means a plan (within the meaning of
Section 3(3) of ERISA) subject to Title IV of ERISA with
respect to which the Company or any of its subsidiaries may have
any liability.
(ii) Accounting Controls and
Disclosure Controls . The Company and its subsidiaries maintain
a system of internal accounting controls sufficient to provide
reasonable assurances that (1) transactions are executed in
accordance with management’s general or specific
authorization; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (3) access to assets is permitted
only in accordance with management’s
